“We outperform this entire sector”

It hasn’t been an easy time for the telecommunications industry this year, with some of the biggest names in the industry significantly underperforming.

AT&T stock (T) is down 20% year-to-date, while Verizon stock (VZ) is down 12%. But by comparison, T-Mobile (TMUS) has held up well, with shares remaining roughly flat since the start of the year.

And on Wednesday, T-Mobile reached a milestone, announcing it will pay its first dividend to shareholders.

“We are outperforming the entire sector in growth, and our capital priorities have not changed,” Sievert told Yahoo Finance Live (video above) at the Goldman Sachs Communacopia and Tech Conference in San Francisco. “It’s about financing this historically great business plan, both the core organic and inorganic businesses, as well as adjacent businesses.”

T-Mobile shares rose 4% on Thursday afternoon following the dividend announcement.

“In 2021, we have set a big and bold goal that we will deliver shareholder returns of up to $60 billion over our planning horizon,” Sievert added. “This is the second installment: $19 billion for the next five quarters and as part of that our first-ever dividend – an annual dividend of $3 billion. That’s $3.75 billion over the next five quarters, which we think will rise about 10% year-over-year.”

Telecommunications giants AT&T and Verizon are known for their high dividends. AT&T will pay about $8 billion, while Verizon will pay about $11 billion annual stock dividend.

Looking ahead, Sievert is trying to capitalize on this turning point.

SPREAD IMAGE FOR T-MOBILE - Mike Sievert, CEO of T-Mobile, answers questions about the company's push into broadband with Internet Freedom in a live streaming event. T-Mobile executives launched the company's first carrierless move for residential and business broadband on Wednesday, May 4, 2022 in Miami Beach, Florida. (Jesus Aranguren/AP Images for T-Mobile)

T-Mobile CEO Mike Sievert answers questions at an event on Wednesday, May 4, 2022, in Miami Beach, Florida. (Jesus Aranguren/AP Images for T-Mobile)

In the second quarter, T-Mobile’s postpaid additions were better than expected and fewer subscribers left the network, although overall revenue fell 2% year-over-year to $19.2 billion.

Sievert explained that investors can continue to expect industry-leading earnings growth and cash flow generation.

“What investors expect from us is consistent, reliable growth, profitable growth that translates into industry-leading cash flow growth – and that’s what we deliver,” Sievert told Yahoo Finance Live. “We have consistently implemented this over time, so we believe it is time to implement the next installment of our long-standing shareholder compensation efforts.”

What’s notable is that there is optimism on Wall Street when it comes to T-Mobile. Analysts’ recommendations for T-Mobile are currently divided into 31 buys, three holds and one sell.

“T-Mobile remains our favorite stock throughout our coverage as we see significant synergies and operating efficiencies that result in strong EBITDA and cash flow growth, as well as significant return on capital,” JPMorgan’s Philip Cusick wrote in July.

Read more about the coverage 2023 Goldman Sachs Communacopia + Tech Conference:

Allie Garfinkle is a senior tech reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and further LinkedIn.

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https://finance.yahoo.com/news/t-mobile-ceo-after-issuing-first-dividend-were-outperforming-this-whole-sector-163715028.html “We outperform this entire sector”

Russell Falcon

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